Entries from June 2010

Ben Smith reports that a group of gay service members are attempting to subpoena President Obama:

The gay soldiers arrested outside the White House protesting “Don’t Ask, Don’t Tell” will annouce today that they’re demanding that President Obama testify in their trial on minor civil disobedience charges.

Their novel argument: Obama himself called on gay rights advocates to pressure him, so they were just following orders.

“Don’t Ask” has energized gay rights activists frustrated with the White House’s deliberate pace, even as Democratic leaders are frustrated with continued protests, as repeal is on track for next year.

…

The subpoena seeks to compel the testimony of President Barack Obama who has, on several occasions as President and Commander in Chief (and previously as a Senator and Presidential Candidate) called on the LGBT community to “pressure” him to change the DADT law and policy, thus allowing gay service members to serve their country openly and honorably.

In a wide ranging interview with Politico, New Jersey Governor Chris Christie warns the Republican party against demagoguery, and points out areas where conservatives could work with the White House, such as education:

New Jersey Gov. Chris Christie on Tuesday in an interview with POLITICO outlined a path for the GOP to rebrand as the party keeping “our eye on the cash register,” while also praising some Democrats for taking the right approach to tackling major issues like education.

Christie, a darling of conservatives after staring down Democrats over the budget and tax cuts, demonstrated his own distinct brand of conservatism over a breakfast interview. Without naming names, the seven-year former federal prosecutor took a shot at politicians who simply resort to “demagoguery” on controversial – and complex – topics such as illegal immigration.

The sit-down came hours after the newly-minted governor returned home from passing the Garden State’s budget, a plan that mostly reflected what he’d spent months pushing for, but one that also cost him some of his popularity in the polls.

Christie has generally avoided talking about national issues in his first six months in office. But he urged President Barack Obama to take the lead on immigration reform, and said he should keep speaking out on teachers union reforms, an issue that has made the New Jersey governor a controversial figure as he’s aggressively fought for changes in his home state.

But he also took positions more closely aligned with some centrist Democrats on issues such as immigration – an issue he said falls victim to “demagoguery” too easily and one that’s a national problem.

General David Petraeus has been unanimously confirmed by the Senate to run the war in Afghanistan:

Petraeus — heralded for his time as commander of operations in Iraq — leaves his post as the head of U.S. Central Command and is expected to be in Kabul as soon as Friday. Obama’s selection of the popular general credited with the success of the “surge” strategy in Iraq is viewed by many as an affirmation of the President’s commitment to combat in Afghanistan, which became America’s longest military engagement earlier this month.

The 99-0 vote showed just how respected Petraeus is, from the most conservative war supporters to its liberal critics.

Petraeus replaces McChrystal, who was relieved of his duties June 23 by Obama after an article in Rolling Stone magazine revealed the general had made disparaging remarks about top White House officials and strategic foreign allies such as France.

Underneath the initial media firestorm surrounding the incendiary remarks, however, were serious questions raised over the American approach to engagement in Afghanistan and the counterinsurgency methods embraced by McChrystal prioritizing the reduction of civilian casualties.

“General Petraeus is clearly qualified for this position and, accordingly, I voted in favor of his confirmation,” said Sen. Russell Feingold (D-Wis.), a leading war critic. “But regardless of who is in command, the president’s current strategy in Afghanistan is counterproductive. We should set a flexible timetable for responsibly drawing down U.S. troops, not just a start date, so that we can pursue a sustainable, global campaign against al Qaeda and its affiliates.

In a radio interview that Think Progress managed to find and transcribe, Congresswoman Michelle Bachmann makes the peculiar assertion that America should avoid joining a “Global Economy” because it might lead to a “one world government.”

Look how that played out in the European Union when they bound all of those nations economies together and one of the smallest economies, Greece, when they got into trouble, that one little nation is bringing down the entire EU. Well, President Obama is trying to bind the United States into a global economy where all of our nations come together in a global economy. I don’t want the United States to be in a global economy where, where our economic future is bound to that of Zimbabwe. I can’t, we can’t necessarily trust the decisions that are being made financially in other countries.

So I think clearly this is a very bad direction because when you join the economic policy of different nations, it is one short step to joining political unity and then you would have literally, a one world government.”

Markos Moulistas, the founder of Daily Kos, is suing the polling firm he has relied on for years, accusing them of providing him with fraudulent data:

The lawyer for Daily Kos is not mincing words when it comes to accusing Research 2000 of outright fraud in its poll data.

“He handed Daily Kos fiction and claimed it was fact and got us to put our name on it,” said Attorney Adam Bonin of R2K president Del Ali.

In an interview with TPMmuckraker, Bonin, of the firm Cozen O’Connor in Philadelphia, says he will file suit against Research 2000 in the next week in the Northern District of California, where Kos is based. The suit will allege “breach of contract, fraud, negligent misrepresentation, and a number of other counts.” It will seek damages for “the amount that was paid for this polling, and … things like reputational harm and punitive damages.” Ali and his attorney have forcefully denied the allegations.

“I think the facts are devastating and they speak for themselves,” says Bonin, pointing to the statistical analysis posted by Kos that alleges that R2K poll data is “bunk” and possibly the product of some kind of randomizer.

Arthur Delaney of the Huffington Post reports that the White House “ethics czar” will be leaving his post to become an ambassador to a European country:

President Obama has nominated his “ethics czar” as ambassador to the Czech Republic, the White House announced on Monday. The White House won’t say whether it plans to replace him.

Eisen’s first act as special counsel to the president for ethics and government reform was to gather up Obama’s campaign promises about battling special interests in Washington and to bundle them into an executive order banning lobbyists from serving in the administration, which Obama signed on his first day in office.

Subsequent Eisen actions have barred lobbyists from federal advisory boards and made thousands of names of White House visitors public.

“Under Norm Eisen’s leadership, the Administration has had a remarkable first year making our government more accessible and accountable, including reducing special interest influence in Washington,” said a White House official. “Among other accomplishments, as government watch-dog groups have recognized, the President’s revolving door lobbying ban for officials leaving government is ‘the most-far reaching ever adopted’; the President’s ‘reverse’ revolving door rules for officials entering government are the ‘first-ever’ and ‘innovative’; and the President’s open government initiatives are ‘unprecedented’ and ‘go well beyond any efforts undertaken by previous administrations.’”

Bill Clinton has thrown his support behind a Democratic challenger to a Senate incumbent:

Former President Bill Clinton announced in an email Tuesday his support for Colorado Democrat Andrew Romanoff in his bid to unseat incumbent Michael Bennet.

Clinton, who met Romanoff in 1992 when he was a student at Harvard, alluded to Romanoff’s career in the Colorado legislature to argue that he gives the party “[its] best chance to hold this seat in November.” Clinton did not mention Bennet, who has received strong and consistent support from the White House.

Romanoff the former Speaker of the Colorado State House, announced his Senate bid last September after discussing potential administration jobs with the White House in the event that he stayed out of the race. President Obama endorsed Bennet shortly after Romanoff announced his candidacy.

Romanoff is the first Democratic Senate challenger to receive Clinton’s support in a primary this season. In Clinton’s home state of Arkansas, the ex-president publicly endorsed incumbent Democrat Blanche Lincoln over challenger Bill Halter. In Pennsylvania, Clinton worked with the White House to lure challenger Joe Sestak out of the Senate race against incumbent and former Republican Arlen Specter.

After five years of legal wrangling, the Supreme Court earlier this week upheld all substantive provisions of the Sarbanes-Oxley law. Even though the law, an overbearing, poorly drafted, government-knows-best monster, easily ranks among the worst portions of the entire United States code, it’s difficult to argue with the Court’s majority reasoning. In hoping that the law might somehow be defeated in the courts, the free-marketers that challenged it made a mistake. Rather than trying for legal long-shots, it’s time to challenge the law’s burdensome core section.

Some background: in the wake of the Enron and Worldcom scandals, President Bush signed Sarbanes-Oxley into law in 2002. The single most important provision of the law, known as section 404, requires an independent audit of nearly every public company’s internal controls on financial reporting. Other provisions of the law stiffen already large penalties for outright fraud, require CEOs to personally sign off on financial statements, and make it much harder for companies to hide liabilities in “off balance sheet” entities like those that brought down Enron. To oversee the entire enterprise, Congress created the semi-independent Public Company Accounting Oversight Board (PCAOB—commonly pronounced “Peek-A-Boo.”)

The Court ruled that the board’s ultimate lack of accountability to the President violated the constitution’s appointments’ clause—which lets the President appoint executive branch officials–and that members of PCAOB could be removed at will rather than only for cause. The entire Sarbanes-Oxley law, PCAOB and all, however, remained in force. Contrary to some fears given voice in the mainstream media this decision seems unlikely to impact governance overall. Certain agencies for whom a degree of independence is desirable (the Federal Reserve Board, for example) already have insulation from momentary political whims. Even if it may become theoretically easier to dismiss them, likewise, administrative law judges and Congress would rightly raise a stink if their true independence were challenged. Other agencies, whose members are appointed by the President, should be accountable to elected officials. In making a narrow based ruling on the meaning of the Constitution and the statute itself, the Court took the correct, narrow and restrained view of its own powers and left Congress’ handiwork intact. Good enough.

But Sarbanes-Oxley is still a bad law. Yes, it has a few decent provisions—CEOs should have to sign off on their accounting statements and pre-SarbOx regulations made it too easy for public companies to hide things off-balance-sheet—but section 404 is a real problem. For medium-sized companies thinking of going public, the marginal costs of Section 404 compliance drive them away from investors. For larger companies with many operating subsidiaries–conglomerates like GE and Berkshire-Hathaway in particular—the compliance costs simply impose an unnecessary burden since these firms very existence already depends on top-notch internal controls. (A firm with many distantly related moving parts can only realize synergies between them if it has these controls.) On the other hand, while large companies with simple structures like Wal-Mart may whine a bit about the law’s costs, ultimately, it amounts to a rounding error on their balance sheets. Most big businesses really aren’t hurt by the law but certain types of enterprises are.

And this is bad enough. There’s no point in calling for repeal of the law (many of its provisions are okay) but it’s time for a frontal attack on section 404’s mandates. So long as they inform investors of their decision, there’s no real possibility of macroeconomic harm in letting smaller newly public firms simply opt out of section 404 altogether even if they’re somehow dishonest. Larger firms certainly need internal controls of some sort but many are so complex that outside auditors appear to impose costs with no benefits to investors. Firms that find it useful should be able to design their own audits and disclose their results outside of the specific federal guidelines. If government supervised internal control audits really are “the gold standard”, then companies that forgo them will, of course, face severe punishment in the markets. There’s simply no reason to keep section 404 as it now exists.

It’s time for venture capitalists and firms with complex structures—the real losers under SarbOx—to make their case in public and explain how little good the law does. Sarbanes Oxley needs serious changes. Court challenges won’t cut it. It’s time for a frontal, practical attack on the law’s worst provision.

What if Paul Krugman is right? Or at least in the neighborhood of right?

The New York Times columnist and Nobel laureate economist has been warning for months: The economy is not recovering.

Through the spring of 2010, Krugman’s warnings seemed to be refuted by signs of growth. But in recent weeks, that expansion has faltered. Private-sector job creation is sputtering. Yesterday’s market drop was especially alarming. Back of it all is the huge anchor that continues to weigh down the economy: the crushing debt load on homeowners.

Here’s a simple way to think about that load. About 44 million U.S. households carry a mortgage. For about 11 million of those, their mortgage exceeds the (current) value of their home. More than 8 million of the 11 million are still making good on their loan payments. But what happens if more people just quit paying?

One result: America’s already sick banking industry would become sicker. Already, it subsists on life support. The Federal Reserve creates money, which it lends to banks for next to nothing. The banks effectively walk from one wicket, where they borrow money for free, over to another wicket, where they lend it back to the government at 3 percent interest.

This accounting game provides banks with a tidy income so they can build their reserves and (it’s earnestly hoped) resume commercial and household lending.

But what if people do not want to borrow? People do not borrow just because credit is available. They do so when they see attractive opportunities to put capital to use. Such opportunities are not exactly abounding these days.

Krugman’s answer is that government should do the borrowing instead, in part to support personal incomes and state government budgets, but especially to substitute for the languishing impetus of the private economy. If no businesses wish to borrow money at 3 percent to build high-speed rail lines or advanced electrical grids and put Americans to work, then government should build instead. Jobs are created, infrastructure is improved, the economy kicks into higher gear, and the shade of John Maynard Keynes smiles approvingly.

Krugman’s prescription is the weak part of his argument. It depends upon all kinds of hypotheses and assumptions from the Keynesian arsenal of ingenuity. Certainly the results of the almost $800 billion spent on fiscal stimulus are not exactly encouraging. Krugman and his supporters offer two main answers to critics of the stimulus: It was not big enough, and too much of it took the form of tax relief instead of direct government expenditure.

That rebuttal reminds me of the old Jewish joke about the Catskills hotel: “The food here is terrible. And the portions – so small!”

The Obama stimulus has failed for many reasons, but here are three that even Krugman and his supporters must surely see:

1) The modern American federal government moves very slowly. Suppose we did decide to borrow another trillion for high-speed rail and electrical grid improvements. How long would the contracting and environmental assessments and judicial challenges take? When could work realistically commence? Half a decade hence? By then the economy would have limped to some kind of recovery of its own by even the most pessimistic reckoning.

2) The projects imagined by the advocates of direct spending are technology intense. But the workers hit hardest by this recession are those with lower skills, and especially the kind of semi-skilled labor employed in the simplified assembly-style housing construction of the 1990s and 2000s. Roosevelt’s New Deal set people to work maintaining parks and improving roads. The public investment stimulus in Krugman’s updated New Deal would operate more indirectly: It would enhance the demand for skilled workers who might very well still be employed, in the hope that those skilled workers would in turn buy things that could be made or done by less-skilled Americans. But what if those government-employed workers spent their extra income on made-in-Japan autos or made-in-Korea flat-screen televisions?

3) Remember, the fundamental problem is a damaged financial system. But the Krugman remedy for that problem is even more indirect than his remedy for unemployment: Direct government spending will (it’s asserted) boost aggregate demand, which will raise incomes, which will support housing prices, which will over time fix the banks. Compared with that Rube Goldberg operation, the current idea — just give the banks money! — seems a model of rationality.

But if Krugman’s direct government expenditure is not a very good policy answer, his dire economic warning remains a haunting policy question. What can we do to accelerate economic growth and job creation? For those of us on the free-market side of the debate, the question is even more haunting: What’s our countervailing idea? And if our countervailing idea is tax cuts, what is our reply to the obvious rebuttal that the Bush tax cuts have been in effect through the whole of this crisis, seemingly without effect?

Andrew Breitbart is offering $100,000 for anyone who can provide the entire JournoList archive:

I’ve had $100,000 burning in my pocket for the last three months and I’d really like to spend it on a worthy cause. So how about this: in the interests of journalistic transparency, and to offer the American public a unique insight in the workings of the Democrat-Media Complex, I’m offering $100,000 for the full “JournoList” archive, source fully protected. Now there’s an offer somebody can’t refuse.

Yes, the mainstream media that came together to play up the false allegations that the “N-Word” was hurled 15 times by Tea Party participants at the Congressional Black Caucus outside the Capitol the day before the “Obamacare” vote, is the same MSM that colluded to make sure the American public accepted the smear, and refused to show the exculpatory videos that disproved the incendiary charges of Tea Party racism.

Ezra Klein’s “JournoList 400” is the epitome of progressive and liberal collusion that conservatives, Tea Partiers, moderates and many independents have long suspected and feared exists at the heart of contemporary American political journalism. Now that collusion has been exposed when one of the weakest links in that cabal, Dave Weigel, was outed. Weigel was, in all likelihood, exposed because – to whoever the rat was who leaked his emails — he wasn’t liberal enough.